Illinois solvency?

Illinois solvency?

"Illinois was more heavily
taxed than the five contiguous states that border it (Indiana, Kentucky,
Missouri, Iowa, Wisconsin) even before January 2011, when Quinn got a
lame-duck Legislature (its successor has fewer Democrats) to raise
corporate taxes 30 percent (from 7.3 percent to 9.5 percent), giving
Illinois one of the highest state corporate taxes, and the fourth
highest combination of national and local corporate taxation in the
industrialized world. Since 2009, Quinn has spent more than $500 million
in corporate welfare to bribe companies not to flee the tax environment
he has created.

Quinn raised personal income taxes 67 percent
(from 3 percent to 5 percent), adding about $1,040 to the tax burden of a
family of four earning $60,000. Illinois' unemployment rate increased
faster than any other state's in 2011. Its pension system is the
nation's most underfunded, and the state has floated bond issues to
finance pension contributions -- borrowing money that someday must be
repaid, to replace what should have been pension money that it spent on
immediate gratifications"

Illinois (and maybe California) is to America what Greece is to the EU? Pretty much the same political road to pretty much the same outcome.

Some interesting commentary on bond markets. What is going to happen when the first state---Illinois, maybe California---formally defaults on its obligation? We have seen municipalities declare bankruptcy already http://www.foxnews.com/po...tcy-in-us-history/ but nobody seems to be paying much attention to the implications---I suspect the pipeline is long, large, and full--mostly those with public sector unions..

"Yet Wisconsin businesses move to Illinois more often than the reverse, even with million$ given in tax incentives by Wisconsin. Why is that?"

I don't know if what you say is true and if so why. Your (redundant) sources, without much documentation, address one factor over one short time period--job growth for one year---but don't support your general conclusion. But anyway, maybe because Wisconsin still has punitive tax rates and the union riots scare business. Or maybe "Since 2009, Quinn has spent more than $500 million in corporate welfare to bribe companies not to flee the tax environment he has created." Will.

My point was long term solvency of Illinois and other traditional Dem/public union states. I made no comparison to Wisconsin, which I believe is presently on much better footing solvency wise and presently getting better in that regard. We'll see later in the year if that trend continues.

Meantime, what do you think happens when the first Illinois (or Wisconsin) municipality declares bankruptcy because it can't meet public union pension/health care obligations? Or the state of Illinois does it first?

Jon, based on your statement I can tell you have no idea about the health of the Wisconsin Retirement System, or how it is funded. But, don't let that stop you from telling us how those leeches are bankrupting the state.

CVBucky wrote:Jon, based on your statement I can tell you have no idea about the health of the Wisconsin Retirement System, or how it is funded. But, don't let that stop you from telling us how those leeches are bankrupting the state.

Jon should lurk more and post less. He's getting destroyed.

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Jon, based on your statement I can tell you have no idea about the health of the Wisconsin Retirement System, or how it is funded

WRS is fine. Health Care benefits promised to retired teachers is an issue though. Not all of that money is currently there. It will go on the budget every year, but as we know the budgets in many district are running at a deficit.

No, CV, I don't know a lot about the solvency of the Wisconsin Retirement System. My understanding is that it is basically better funded than many states but the health care portion not so much. That's why I expressed no opinion about it, except "Wisconsin, which I believe is presently on much better footing solvency (in toto, not just retirement) wise and presently getting better in that regard". Not sure why you find that offensive. So how much do employees pay in, and how are the benefits structured----compared to Illinois?

Again, my point is Illinois solvency (or lack of) and how it got there.

I will be soooooo pissed if our government bails out IL, NY and CA when they all go tits up. Let them rot for what they believe, if TX goes tits up, we better not bail them out either. Of course, TX won't go tits up.

I live in Chicago, and the trend here has been towards better government. In Cook County, we've got Tony Preckwinkle taking over from the utterly corrupt Todd Stoger. She's a tough old bird, having been an alderman in Hyde Park for many years, but she's known for her honesty, integrity, and competence, and seems to be doing a good job.

Rahm Emmanuel is doing what you Republicans should stand up for. Getting tough with city contractors and unions, and squeezing money from places and people that were previously fatcat pals of the former mayor. He's made some enemies already, but they're the kind of entities that GOP types would be pleased to see the mayor to push back against. On the downside for me personally, he's also going after the museums and zoos for every penny he can get, but the city is broke and he's trying to increase revenue without raising taxes and fees. Again, the kind of thing that Scott Walker would approve of, but Chicago style: negotiated under the public radar.

I don't really know that much about Quinn, but he appears to be basically an earnest and honest guy. His approval ratings are terrible, but that's probably a good sign. Raising taxes sucks, but it had to be done. At least Illinois businesses can be confident that our infrastructure will support their transportation and utility needs going forward.

And as some other people noted, Illinois' economy seems to be on the mend. There are some new highrises going up downtown again, and traffic is worse than ever, which is a good sign, no matter how obnoxious for me personally.

zoobadger wrote:I don't really know that much about Quinn, but he appears to be basically an earnest and honest guy. His approval ratings are terrible, but that's probably a good sign. Raising taxes sucks, but it had to be done. At least Illinois businesses can be confident that our infrastructure will support their transportation and utility needs going forward.

And as some other people noted, Illinois' economy seems to be on the mend. There are some new highrises going up downtown again, and traffic is worse than ever, which is a good sign, no matter how obnoxious for me personally.

You are aware that raising the taxes was supposed to free up several billion so they could actually fund some of their pension funds but the gap actually widened this year. Illinois hasn't come close to solving their problems. The only thing that would save them is an enviroment where they can earn 20-25% on their money for 10-15 years in a row. California looks to be in good shape compared to issues facing Illinois.

zoobadger wrote:I don't really know that much about Quinn, but he appears to be basically an earnest and honest guy. His approval ratings are terrible, but that's probably a good sign. Raising taxes sucks, but it had to be done. At least Illinois businesses can be confident that our infrastructure will support their transportation and utility needs going forward.

And as some other people noted, Illinois' economy seems to be on the mend. There are some new highrises going up downtown again, and traffic is worse than ever, which is a good sign, no matter how obnoxious for me personally.

You are aware that raising the taxes was supposed to free up several billion so they could actually fund some of their pension funds but the gap actually widened this year. Illinois hasn't come close to solving their problems. The only thing that would save them is an enviroment where they can earn 20-25% on their money for 10-15 years in a row. California looks to be in good shape compared to issues facing Illinois.

So the current administration and legislature hasn't made improvement?

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Myles the gap widened last year. It did not shrink, so while they get some credit they are worse off than they were a year ago. If you start at your 35 then go all in and end up at your 30 were you successful. In most arenas that is failing.

Strange Brew eh wrote:Myles the gap widened last year. It did not shrink, so while they get some credit they are worse off than they were a year ago. If you start at your 35 then go all in and end up at your 30 were you successful. In most arenas that is failing.

Myles also seems to think that requests for new home permits being at 50 year lows is progress. I think your football analogy is fitting.

Strange Brew eh wrote:Myles the gap widened last year. It did not shrink, so while they get some credit they are worse off than they were a year ago. If you start at your 35 then go all in and end up at your 30 were you successful. In most arenas that is failing.

Myles also seems to think that requests for new home permits being at 50 year lows is progress. I think your football analogy is fitting.

Actually, the 50 year low was in 2011. New permits are up in 2012 by some estimates over 25% from the lows of a year ago. Still a long way to go, but the trends are encouraging.

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"Do you understand the difference between how health care benefits are funded for teachers and for other state employees? "

Not really, CV, and I don't care. Assuming you are talking about the Wisconsin system, it's irrelevant to Illinois solvency and the policies that threaten it.

Yank---you know attempts to bail out insolvent states with $ stolen from taxpayers, borrowed from our great grandchildren, and printed on borrowed paper, is coming. When and in what form depends on political wind shifts., and maybe SCOTUS decisions. I expect some major moves on this if Obama wins and maybe a lame duck stab at it if he loses. The grasshoppers are always planning more attacks on the ants.

Yep, future generations will pay for it, Jon. Every time they request more tax increases (bailouts) it speaks volumes about the enormous failures of their policies. They'll keep kicking the can down the road though, our kids are certain to lead a shitty life because of the selfish elites of our time. The public sector (progressives) have fucked up every state in the land. Where they have more control, its even worse. Illinois and California clearly stand out.....

Here is a good article where even some democrats attempt to talk honestly, even if they lack the courage and conviction to lead us away from these problems. Democrats are owned by unions and radical fringe elements from various progressive (oxymoron) movements....there just isn't a moderate wing with a voice for the political left. We'll need to destroy these movements and its leaders to salvage the country from certain fiscal disaster.

Chicago Mayor Rahm Emanuel recently offered a stark assessment of the threat to his state's future that is posed by mounting pension and retiree health-care bills for government workers. Unless Illinois enacts reform quickly, he said, the costs of these programs will force taxes so high that, "You won't recruit a business, you won't recruit a family to live here."

We're likely to hear more such worries in coming years. That's because state and local governments across the country have accumulated several trillion dollars in unfunded retirement promises to public-sector workers, the costs of which will increasingly force taxes higher and crowd out other spending. Already businesses and residents are slowly starting to sit up and notice.

"Companies don't want to buy shares in a phenomenal tax burden that will unfold over the decades," the Chicago Tribune observed after Mr. Emanuel issued his warning on April 4. And neither will citizens.

Government retiree costs are likely to play an increasing role in the competition among states for business and people, because these liabilities are not evenly distributed. Some states have enormous retiree obligations that they will somehow have to pay; others have enacted significant reforms, or never made lofty promises to their workers in the first place.

Indiana's debt for unfunded retiree health-care benefits, for example, amounts to just $81 per person. Neighboring Illinois's accumulated obligations for the same benefit average $3,399 per person.

Illinois is an object lesson in why firms are starting to pay more attention to the long-term fiscal prospects of communities. Early last year, the state imposed $7 billion in new taxes on residents and business, pledging to use the money to eliminate its deficit and pay down a backlog of unpaid bills (to Medicaid providers, state vendors and delayed tax refunds to businesses). But more than a year later, the state is in worse fiscal shape, with its total deficit expected to increase to $5 billion from $4.6 billion, according to an estimate by the Civic Federation of Chicago.

Rising pension costs will eat up much of the tax increase. Illinois borrowed money in the last two years to make contributions to its public pension funds. This year, under pressure to stop adding to its debt, the legislature must make its pension contributions out of tax money. That will cost $4.1 billion plus an additional $1.6 billion in interest payments on previous pension borrowings.

Business leaders are now speaking openly about Illinois' fiscal failures. Jim Farrell, the former CEO of Illinois Toolworks who is heading a budget reform effort called Illinois Is Broke, said last year that the state is squandering its inherent advantages as a business location because "all the other good stuff doesn't make up for the [fiscal] calamity that's on the way." Caterpillar, the giant Peoria-based maker of heavy construction machinery, made the same point more vividly when it declined in February to locate a new factory in Illinois, specifically citing concern about the state's "business climate and overall fiscal health."

California is another place where businesses have come to view three years of budget uncertainty and huge pension liabilities (not to mention the state's already high taxes and complex regulatory regime) as an inducement to migrate elsewhere. The state and its municipalities already face unfunded pension bills that now top $500 billion, according to studies by Stanford University's Joe Nation, and several of the state's cities, including Stockton in the Central Valley, face the prospect of insolvency.

Executives at Stasis Engineering, a formerly Sonoma, Calif.-based auto design firm that left the state for West Virginia in the midst of an unfolding budget crisis in 2009, told the Press Democrat newspaper that the "budgetary bedlam gripping Sacramento" seemed to portend, as the paper characterized the company's concerns, "a future filled with tax increases and service cuts." More recently, in December 2011, Ron Mittelstaedt, the chief executive of Waste Connections, a recycling company formerly based in Folsom, Calif., told the press that the state's "structural [budget] mess" was a contributing factor in its decision to relocate to Texas.

Meanwhile, Oakland Tribune columnist Daniel Borenstein notes that his city has levied what he calls a "hidden pension tax" on property owners for decades to pay off a municipal pension fund that went bust in 1976. Today, the average Oakland home with an assessed value of $266,267 pays an additional $419 a year in property taxes to finance the benefits of the defunct system, Mr. Borenstein estimates, while a home assessed at $1 million pays an added $1,575 in taxes.

Bigger bills will fall due elsewhere. Earlier this year, the Massachusetts Taxpayers Foundation examined unfunded retiree health-care liabilities in 10 midsize municipalities, including Worcester and Springfield, and found the debt averaged $13,685 per household. To pay those commitments over 30 years would require adding $565 a year to property tax bills on average, the group estimated. In one community, Lawrence, the tab was $1,209 annually, a 50% increase over current taxes.

Back in Illinois, Dana Levenson, Chicago's former chief financial officer, has projected that the average city homeowner paying $3,000 in annual property taxes could see his tax bill rise within five years as much as $1,400. The reason: A 2010 Illinois law requires municipalities to raise the funding levels in their pension systems using property tax revenues but no additional contributions from government employees. The legislation prompted former Chicago Mayor Richard Daley in December to warn residents that the increases might be so high, "you won't be able to sell your house."

"Nearly four million more people have left the Golden State in the last two decades than have come from other states. This is a sharp reversal from the 1980s, when 100,000 more Americans were settling in California each year than were leaving. According to Mr. Kotkin, most of those leaving are between the ages of 5 and 14 or 34 to 45. In other words, young families."

Come on guys, tell us what a stupid right-winger Rahm is. Or maybe it's Bush's fault?

Illinois is in a bad shape and has only started getting better. The absence of critiquing and labeling to Emanuel is because some of us here sift and winnow and are not limited by labels and political party affiliation. It's OK to go against your party affiliation when you are doing what's best for your constituents. In fact, it should be mandatory. That you can't even identify this simplest of nuance speaks volumes and surprises nobody.

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"Gentlemen, you can't fight in here! This is the War Room.' President Muffley
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My Badger Sports Photos

Come on guys, tell us what a stupid right-winger Rahm is. Or maybe it's Bush's fault?

Illinois is in a bad shape and has only started getting better. The absence of critiquing and labeling to Emanuel is because some of us here sift and winnow and are not limited by labels and political party affiliation. It's OK to go against your party affiliation when you are doing what's best for your constituents. In fact, it should be mandatory. That you can't even identify this simplest of nuance speaks volumes and surprises nobody.

Come on guys, tell us what a stupid right-winger Rahm is. Or maybe it's Bush's fault?

Illinois is in a bad shape and has only started getting better. The absence of critiquing and labeling to Emanuel is because some of us here sift and winnow and are not limited by labels and political party affiliation. It's OK to go against your party affiliation when you are doing what's best for your constituents. In fact, it should be mandatory. That you can't even identify this simplest of nuance speaks volumes and surprises nobody.

What is getting better in Illinois?

Fiscal responsibility. More fee based services. We are paying more and receiving less from our gov't. It's a combination of tax increases and budget cuts across the board. Stuff that needed to get done. Most of it is above your pay grade.

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"Gentlemen, you can't fight in here! This is the War Room.' President Muffley
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My Badger Sports Photos